BONGGANG-BONGGANG REVIEWER IN LAW

1. The concept of ultra-vires acts

Means simply an act which is beyond the conferred powers of a corporation or the purposes
for which it is created.
2. Appraisal rights
The so-called appraisal right of a stock holder refers to his right to demand payment of the fair
value of his shares, after dissenting from a proposed corporate action involving a fundamental
change in the charter or articles of incorporation in the cases provided by law.
3. Pre-emptive right
Whenever the capital stock of a corporation is increased and new shares of stock are issued,
the new issue must be offered first to the stockholders who are such at the time the increase
was made in proportion to their existing shareholdings and on equal terms with other holders of
the original stocks before subscriptions are received from the general public.
4. Subscribed capital stock / paid-up capital stock / par-value shares / shares of stock
Subscribed capital stock is the amount of the capital stock subscribed whether fully paid or not.
Paid-up capital stock is that portion of the subscribed or outstanding capital stock that is paid.
Par-value shares is one with a specific money value fixed in the articles of incorporation and
appearing in the certificate of stock for each share of stock of the same issue.
Shares of stock are one of the units into which the capital stock is divided.
5. Capital / legal capital
Capital
Is used broadly to indicate the entire property or assets of the corporation.
The amounts invested by the stockholders plus the undistributed earnings less losses
and expenses.
Portion of the net assets paid by the stockholders as consideration for the shares
issued to them, which is utilized for the prosecution of the business of the corporation.
Is the actual corporate property.
Legal capital is the amount equal to the aggregate par value and/or issued value of the
outstanding capital stock.
6. Treasury shares / treasury stock
Treasury shares is share which has been lawfully issued by the corporation and fully paid for
and later reacquired by it either by purchase, redemption, donation, forfeiture or other lawful
means
Treasury stock
7. Redeemable shares
Or callable shares is share, usually preferred, which by its terms is redeemable at a fixed date
or at the option of either the issuing corporation or the stockholder or both at a certain
redemption price.
8. Promoter / subscriber
Promoter
Persons who bring about or cause to bring to bring about the formation and
organization of a corporation by bringing together the incorporators or the persons
interested in the enterprise, procuring subscriptions or capital for the corporation and
setting in motion the machinery which leads to the incorporation of the corporation
itself.
Subscriber
Persons who have agreed to take and pay for original, unissued shares of a
corporation formed or to be formed.
9. Incorporators
Are those corporators mentioned in the articles of incorporation as originally forming and
composing the corporation and who executed and signed the articles of incorporation.
10. Shares of stock / dividends / kinds of dividends
Share of stocks in one of the units into which the capital stock is divided
Commonly used in a distributive sense to refer to the stock in the hands of the
stockholder.
Merely represents a distinct undivided share or interest in the common property of the
corporation.
 Constitute property distinct from the capital or tangible property of the corporation and
belong to the different owners
Do not constitute an indebtedness of the corporation to the shareholder and are,
therefore, not credits.
Only represents and undivided part of the corporations property, or the right to share
in its proceeds to that extent
Dividends
A portion of profit of a corporation set aside declared and ordered by the directors to
be paid ratably to the stockholders on demand or at a fixed time.
It is a payment to the stockholders of a corporation as a return upon their investment.
Kinds of Dividends
Cash dividends dividend payable in cash.
Property dividends dividend distributed to the stockholders in the form of property,
real, or personal. e.g. warehouse receipts, or shares of stock of another corporation.
Stock dividend dividend payable in unissued or increased or additional shares of the
corporation instead of in cash or in property.
Optional dividend dividend which gives the stockholder an option to receive cash or
stock dividend.
Scrip dividend a writing of certificate issued to a stockholder entitling him to the
payment of money or the like at some future time in as much as the corporation at the
time such dividends are declared has profits not in cash, or has no sufficient cash, or
has the cash but wishes to reserve it for some corporate purposes.
Bond dividend dividend distributed in bonds of the corporation to the stockholders.
Preferred divided dividend payable to one class of stockholders in priority to be paid
to another class.
Cumulative dividend dividend payable at a certain rate at stated times and if the
stipulated dividend is not paid in any dividend period, the dividend in arrears must also
be paid the following period.
Liquidating dividend which are actually distribution of the assets of the corporation
upon dissolution or winding up of the same.
11. Trust fund doctrine
Holds that the assets of the corporation as represented by its capital stock are trust funds
to be maintained unimpaired and to be used to pay corporate creditors in the sense that
there can be no distribution of such assets among the stockholders without provision being
first made for the payment of corporate debts and that any such disposition of its assets to
the prejudice of the creditors of the corporation is null and void.
12. Doctrine of piercing the veil of corporate entity
The doctrine that a corporation is a legal entity or a person in law, distinct from the persons
composing it, is a legal theory introduced for purposes of convenience and to promote the
ends of justice.
13. Doctrine of corporate opportunity
A director who, by virtue of his office, acquires for himself a business opportunity which
should belong to the corporation, thereby obtaining profits to the prejudice of such
corporation, is guilty of disloyalty and should, therefore, account to the latter for all such
profits by refunding the same, notwithstanding that he risked his funds in the venture.
14. Universal partnership of all profits
Is one which compromises all that the partners may acquire by their industry or work
during the existence of the partnership and the usufruct of movable or immovable property
which each of the partners may possess at the same time of the celebration of the
contract.
15. Universal partnership of all present property
Is one in which the partners contribute all the properties which actually belong to each of
them at the time of the constitution of the partnership to a common fund, with the intention
of dividing the same among themselves as well as the profits which they may acquire
therewith.
16. Capital stock / legal capital
Capital stock
 Is the amount fixed in the Articles of incorporation, to be subscribed and paid in by
the shareholders of a corporation.
Legal capital
Is the amount equal to the aggregate par value and/or issued value of the
outstanding capital stock.
18. Outstanding capital stock
Includes all shares of stock issued to subscribers or stockholders of a stock corporation
which are fully paid, as long as there is a binding subscription agreement between the
subscriber or stockholder and the corporation.
19. Board of trustee
An appointed or elective board that supervised the affairs of a public or private
organization.
20. Board of directors
Elected to act as, representative of the stockholders to establish corporate management
related policies and to make decisions on major company issues.
21. Industrial partner
One who contributes only his industry or personal service.
22. Interlocking directors
One that serves as a director of two or more corporations at one time.
23. Close corporation
A corporation in which the stock is held in few hands, or in few families and which stock is
not all or only rarely dealt in buying or selling.
24. Foreign corporation
A corporation created by or under the laws of another state or country.
25. Corporation sole
A religious corporation which consists of one member or corporators only and his
successor, such as bishop.
26. Public corporation vis--vis GOCC and quasi-public corporation
Public corporation vis--vis GOCC
Are owned and controlled by the government directly through a parent corporation
or subsidiary, to the extent of at least a majority of its outstanding capital stock or
of its outstanding voting capital stock.
Quasi-public corporation
Which have accepted from the State the grant of a franchise or contract involving
the rendition or performance of some public duties or service, but which are
organized for profit. public utilities
27. Private corporation
Those formed for some private purpose, benefit, or end; it may be a stock or non-stock
corporation, GOCC or quasi-public corporation.
28. Merger
Two or more corporations unite, one corporation which remains in being, absorbing or
merging in itself the other which disappears as a separate corporation.
29. Consolidation
Two or more corporation unite, giving rise to a new corporate body and dissolving the
constituent corporations as separate corporations.
30. Who are prohibited to engage in partnership
Any person who is not capable under the law of entering into contractual relations such as
minors, insane or demented persons, deaf-mutes who do not know to read and write,
persons who are suffering from civil interdiction, and who are under guardianship.
31. Partnership
Is an association of two or more persons to carry on as co-owners a business with the
intention of dividing the profits among themselves.
32. Corporations vis--vis its power and attributes
May exercise only such powers as are granted by the law of its creation. An express grant,
however, is not necessary. All powers may be implied from those expressly provided by
law and those which are incidental or essential to the corporations existence may also be
exercised.
33. Stock and non-stock corporation
 Stock corporation
is a corporation in which the capital is contributed by the shareholders and divided
into shares represented by certificates.
Non-stock corporation
Is one where no part of its income is distributable as dividends to its members,
trustees, or officers.
34. De facto and de jure corporation
De facto corporation
Is one which actually exists for all practical purposes as a corporation but which
has no legal right to corporate existence as against the State.
De jure corporation
Is one created in strict or substantial conformity with the mandatory statutory
requirements for incorporation and whose right to exist as a corporation cannot be
successful questioned by any party even in a direct proceeding for that purpose by
the State.
35. Corporations which require a certain percentage of Filipino ownership of the shares of stock
36. Distribution of assets / distribution of losses of partnership
Distribution of Assets
a) Those due to creditors, including limited partners, except those on account of their
contributions in the order of priority as provided by law;
b) Those due to limited partners in respect to their share of the profits and other
compensation by way of income on their contributions;
c) Those due to limited partners for the return of capital contributed;
d) Those due to general partners other than for capital and profits;
e) Those due to general partners in respect to profits;
f) Those due to general partners for the return of the capital contributed.
Distribution of losses of partnership
a) The losses shall be distributed according to their agreement
b) If no agreement, the share of each in the losses shall be in accordance with the
profit-sharing ratio, but the industrial partner shall not be liable for losses.
c) If there is no profit-sharing stipulated in the contract, then losses shall be borne by
the partners in proportion to their capital contributions, but purely the industrial
partner shall not be liable for the losses.
37. How to remove a member of the BOD
a) The removal must take place either at a regular meeting of the corporation or at a
special meeting called for purpose;
b) There must be previous notice to the stockholders or members of the corporation
of the intention to propose such removal at the meeting;
c) The removal must be by a vote of the stockholders holding or representing two-
thirds (2/3) of the outstanding capital stock, or if the corporation be a non-stock
corporation, by a vote of two-thirds (2/3) of the members entitled to vote.

38. General partnership

One whose liability to third persons extends to his separate property.
39. Limited partnership (including preference of distribution of assets)
Is one by two or more persons having as members one or more general partners and one
or more limited partners, the latter not being personally liable for the obligations.
Preference of distribution of assets
a) Those due to creditors, including limited partners, except those on account of their
contributions in the order of priority as provided by law;
b) Those due to limited partners in respect to their share of the profits and other
compensation by way of income on their contributions;
c) Those due to limited partners for the return of the capital contribution;
d) Those due to general partners other than for capital and profits;
e) Those due to general partners is respect to profits; those due to general partners
for the return of the capital contributed.
40. Watered stock
Is a stock issued for no value at all or for a value less than its equivalent
41. Delinquent stock
Upon failure of the holder to pay the unpaid subscription or balance.
42. Dissolution / winding up
Dissolution
Is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on of the business.
Winding up
Is the process of settling the business or partnership affairs after dissolution.
43. Capitalist / managing partner
Capitalist
One who contributes money or property to the common fund
Managing partner
One who manage the affairs or business of the partnership
44. Retained earnings vis--vis unrestricted retained earnings
Such earning or portions thereof are said to be unrestricted and, therefore, available for
dividend distribution, if they have not been reserved or set aside by the board of directors
for some corporate purpose nor are required by the law.
45. Characteristics of partnership
a) Consensual perfected by mere agreement; implied agreement of two or more
persons
b) Nominate has a special name or designation in our law
c) Bilateral it is entered into by two or more persons and the rights and obligations
arising therefrom are always reciprocal
d) Onerous each of the parties aspires to procure himself a benefit through the
giving of something
e) Commutative the undertaking of each of the partner is considered as the
equivalent of that of the others
f) Principal it does not depend for its existence or validity upon some other contract
g) Preparatory it is entered into as a means to an end
46. Derivative suit / individual suit / representative suit
Derivative suit
Defined as one brought by one or more stockholders or members in the same
name and on behalf of the corporation redress wrongs committed against it or to
protect or vindicate corporate rights, whenever the officials of the corporation
refuse to sue, or are the ones to be sued or hold control of the corporation.
Individual suit
An action brought by a stockholder against the corporation for direct violation of
his contractual rights as such individual stockholder.
Representative suit
A wrong is committed against a group of stockholders, a stockholder may bring a
suit in behalf of himself and all other stockholders who are similarly situated